Heelys Narrows Q3 Loss

Heelys Inc. narrowed its loss in the third quarter despite still-falling sales.

For the period ended Sept. 30, the Dallas-based firm reported a net loss of $69,000, an improvement over a loss of $1.1 million in the same period a year ago.

It earned zero cents a share, compared with last year’s loss of 4 cents.

Net sales for the quarter were $8.2 million, down 23 percent from $10.7 million, as revenue from both domestic and international divisions fell.

The drop in international revenue was caused by slower than anticipated spring and summer seasons with certain retailers in the German and French markets, the company said in a statement.

Domestic sales were affected by a combination of lower sales to discount channels, as well as retailers’ caution taking risk on inventory, the firm added.

But Heelys managed to cut selling, general and administrative expenses to $3.5 million, from $4.1 million.

Tom Hansen, CEO of Heelys, said the firm continues to see reluctance among some domestic retailers to commit to significant inventory.

“At the same time, we’ve seen an increase in consumer interest in the brand and requests for information on where to buy new styles and new products, such as our two-wheeled HX2. We’ve also seen renewed interest among retailers that have not carried Heelys recently, as well as positive sell-throughs with key retailers in small door programs,” he said.

Hanson added the firm will continue its efforts to reduce costs and refocus spending on marketing and new product development to drive both brand awareness and sales.

As of Sept. 30, 2010, the firm had cash and investments totaling $65.9 million.